IT departments can be forced to upgrade business applications because the alternatives are unpalatable. But sometimes tackling a tough problem can yield unexpected rewards.
With a 10-year-old enterprise resource planning (ERP) system, multinational minerals firm Imerys was facing increasing costs each time it wanted to add new features. Among these was support for the introduction of the Single Euro Payment Area, which simplifies electronic bank transfers in the currency union. Meanwhile, the Oracle database infrastructure underlying its IFS ERP system, first introduced in 2003, was becoming unsupported. It would not upgrade the database on the old system.
Yet attaching additional business benefits to the £1 million upgrade investment was difficult. Processes remained largely the same following the switch, says Michael Dixon, IT business project manager.
“We were finding it harder and harder. All the new functionality was available in the new versions of IFS. Some we were able to backport, but as we got further and further behind the upgrade curve, that was becoming more and more expensive to do,” Dixon says.
“There was no massive financial benefit to upgrade, but we said, 'We need to do this', and we got the business buy-in on that basis,” Dixon says.
Financial crisis throws ERP upgrade off course
For more on ERP upgrades
Imerys, which operates in 47 countries with a turnover of €3.8 billion, has grown through acquisition. It uses around 30 different ERP systems around the globe. While the business does plan to consolidate its global ERP estate, which includes SAP, Oracle, JD Edwards, and Microsoft Dynamics, it is unlikely to move on to a single system, Dixon says.
From 2008, however, it started moving to a single version of IFS across a range of its businesses, mainly located in Europe, involved with ceramic materials, filtrations and additives, and refractory minerals. These accumulate around €700m turnover.
But the timing of the upgrade was unfortunate. The business of extracting and processing mineral reserves was hit hard by the financial crisis.
“We cut everything to the bone as we are heavily tied into manufacturing and automotive industries. We were in defensive mode,” Dixon says. “It was only when we started to climb out of that, could we come up with a new upgrade proposal,” Dixon says.
The upgrade to IFS 7.5 went live in the UK in February 2012 after six months of working on modifications with IFS, six months preparation and testing, and six months planning and rolling out the application across 16 countries to around 2,500 users.
The goal is to reduce the necessary modifications to make more frequent upgrades affordable
Michael Dixon, Imerys
Although the project sought to cut development and support costs by reducing the modifications necessary to the standard package, Imerys required some adjustments.
The major modification supports supply chain services, an offering particular to Imerys. The minerals multinational firms provide shipping services to customers, which can see 30,000 tonnes of minerals shipped by sea, road and rail across a continent.
“We use the offering to add value and we wanted that to be properly embedded in IFS," Dixon says.
The in-house IT team worked with the supplier to develop the capability. The upgrade did however cut the number of modifications from 153 to 60.
Dixon is now working with the IFS R&D community, its supply chain director, as well as the industry verticals advisory council, to try to get the supply chain modification included in the core product for future upgrades.
The goal is to reduce the necessary modifications to make more frequent upgrades affordable, he says.
Although it was the first major upgrade in 10 years, the business made no adjustments to its processes as the system went live. Only the interface, IFS Enterprise Explorer, changed.
More on document management
This allowed a smooth transition to the new system, which went live on a single 'big bang', Dixon says.
All doughnuts eaten
“We finished on a Friday, kicked all the users out the system, and by Sunday evening we were back up again, ready for work. On Monday the users came in, we had a war room prepared, expecting the worst. But by about 11am we had eaten all the doughnuts and were laughing and joking. We had one call because someone had forgotten a password.”
But since the upgrade, Dixon’s team has run a programme to help the business take advantage of the new functionality available in IFS 7.5, accruing benefits after the application was deployed. These include document management features, which will store 16,000 environment, health and safety documents. Other potential projects include e-invoicing and mobile applications.
Meanwhile, the company is set to avoid upgrading its laboratory information management system by exploiting features in the new IFS, potentially saving significant IT spending elsewhere, Dixon says.
The IFS upgrade has boosted the executive team's confidence in IT projects
Although these benefits have not been added to the measure of return on investment for the IFS upgrade, they could become part of the business case for future upgrades, he says.
“We have not gone back over it because we are flat out and moving forward, but it was always the intention that the upgrade would facilitate all this work. Next time we will be able to pull in these extra pieces of work [to the business case].”
Dixon says the IFS upgrade has boosted the executive team's confidence in IT projects. Although it was difficult, and born out of a technical necessity, the business is now finding new ways to use the system which can create more efficient processes.